22 May 2023


The business world has significantly shifted towards hosted or cloud phone systems in recent years. The traditional on-premise phone systems are becoming obsolete, and businesses are turning to cloud based phone systems for their advanced features and flexibility. The popularity of hosted phone systems over on-premise phone systems is widespread and for good reason. Hosted phone systems is a cloud-based solution that is easily scalable, secure, and cost-effective.

Hosted vs on-premise phone systems have been a topic of debate for businesses of all sizes. With the rise of cloud technology, hosted phone systems, also known as hosted PBX, virtual PBX, Hosted VoIP or cloud phone system, have become increasingly popular. While both systems come with their pros and cons, we will highlight why hosted phone systems are the better choice for businesses looking for an affordable, scalable, flexible, and feature-rich communication solution. So, let's dive into the details of hosted vs on-premise phone systems and explore why a cloud-based phone system might be the right fit for your business.

Understanding the on-premise and hosted phone systems

When considering options for a business phone system, you have two main choices, namely, hosted and on-premise. Any phone system that we choose will come with both advantages and disadvantages. Hence, it's very necessary to understand both phone systems in order to reach a decision of preferring one over the other.

On-premise phone systems

On-premise phone systems, also known as PBX (Private Branch Exchange) phone systems, are physically installed and managed on-site. The business has complete ownership and control over all the necessary hardware and software required to operate the phone system.

Key Features of on-premise phone systems

Full control

Since the system is installed on-site, businesses have full control over the phone system and can customize it to their specific needs.


On-premise phone systems are not reliant on an internet connection and can still function even if the internet goes down.

Maintenance and updates

Maintaining and updating the system is the responsibility of the businesses, which can entail significant time and financial investments.


On-premise phone systems are less flexible when it comes to scaling up or down. Adding more lines or features may require additional hardware and installation.

Pros and cons of traditional on-premise phone systems

Pros Cons
Full control over system customization and configuration High upfront costs for hardware and installation
Not dependable on a stable internet connection for functioning Limited scalability without additional hardware and installation
Reliability in case of an internet outage or disruption Maintenance and updates require time and resources
Data security and control over sensitive information Requires physical space for equipment and hardware
Self-manage Maintenance contracts and cost


Hosted Phone Systems

Hosted phone systems, alternatively known as cloud-based phone systems, are hosted by a third-party provider and accessed via the Internet. Instead of having hardware on-site, all the equipment and software needed to run the phone system are located in data centres owned and managed by the provider.

Key features of hosted phone systems

No need for on-site hardware

The businesses don't need to purchase and maintain physical hardware on-site because the equipment is hosted in the cloud.

Easy to install

The hosted phone solutions have a user-friendly interface that can be easy with a click. Furthermore, the provider handles all the hardware and software setup for you, which allows you to focus on your business.


Hosted phone systems can be easily scaled up or down as a business's needs change.

Lower upfront costs

Hosted phone systems typically require less upfront investment than on-premise systems since businesses don't need to purchase hardware.

Automatic updates and maintenance

The provider is responsible for updates and maintenance, so businesses don't need to worry about keeping the system up to date.


The hosted phone system provides enhanced flexibility, enabling businesses to access their phone systems from any location and on various devices with an internet connection. This ensures seamless connectivity and increased productivity regardless of the user's whereabouts.


Hosted phone systems depend on a stable internet connection to function properly. If the internet connection goes down, the phone system may be affected.

Pros and cons of hosted phone systems

Pros Cons
Lower upfront costs since the hardware is hosted in the cloud Reliance on a stable internet connection for functioning
No need for physical space or maintenance of hardware Data security concerns and reliance on provider
Automatic updates and maintenance by the provider Can face call quality issues due to poor internet connectivity
Easy scalability to add or remove lines or features  
A wide range of features and integrations are available  


Hosted vs on-premise phone systems: A side-by-side comparison of the benefits

It is now clear that hosted phone system is a cloud-based service that is delivered over the internet, while an on-premise system is installed and maintained on-site at the business location. Let's compare the benefits of both to pick one that is a perfect match in today's rapidly advancing and changing world of business.

Comparing cost:

When it comes to cost, a hosted phone system is often the more affordable option. With a hosted system, there is no need to purchase and maintain expensive hardware, as the provider handles all of that. On the other hand, with an on-premise system, businesses are required to make investments in hardware, and software, and incur ongoing maintenance costs. Additionally, if a business grows or changes locations, it will need to purchase additional hardware or pay for costly system upgrades.

Comparing scalability:

A hosted phone system is highly scalable, which makes it an ideal solution for businesses experiencing growth or dealing with fluctuating call volumes. As a result, scaling up or down with a hosted system is easy and cost-effective. Moreover, providers typically offer flexible pricing plans and don't require long-term commitments. On the contrary, an on-premise system may require businesses to purchase new hardware or software licenses when scaling up, Resultantly, which can be both costly and time-consuming.

Comparing flexibility:

Hosted phone systems offer greater flexibility than on-premise systems. For example, with a hosted system, employees can work remotely from any location as long as they have an internet connection. Consequently, making it easier for businesses to embrace remote work and flexible schedules. An on-premise system, however, requires employees to be on-site to access the phone system, limiting flexibility and remote work capabilities.

Comparing maintenance:

With a hosted phone system, the provider takes care of all maintenance and upgrades, so businesses don't have to worry about it. On-premise systems, on the other hand, require businesses to manage and maintain their own hardware and software, which can be time-consuming and costly.

Comparing features:

Hosted phone systems typically offer more advanced features than on-premise systems, including voicemail-to-email, auto-attendant, call forwarding, call queuing, and more. These features help businesses improve customer service, increase productivity, and streamline communications. On-premise systems may have limited features or require additional hardware or software to access advanced features.


Key difference Hosted Phone System On-Premise Phone System
Cost More affordable as the provider handles hardware and maintenance More expensive due to hardware, software, and maintenance costs
Scalability Highly scalable, easy to scale up or down with flexible pricing plans Requires purchasing new hardware or software licenses, which can be costly and time-consuming
Flexibility Employees can work from anywhere with an internet connection, allowing for remote work Employees need to be on-site to access the phone system, limiting flexibility and remote work capabilities
Maintenance The provider handles all maintenance and upgrades Businesses need to manage and maintain their own hardware and software, which can be time-consuming and costly
Features Offers more advanced features such as voicemail-to-email, call forwarding, call queuing, etc. May have limited features or require additional hardware or software to access advanced features


Hosted vs on-premise phone systems: Which one is right for your business?

After having a closer look at the hosted vs on-premise phone systems features and benefits, we can now easily say a hosted VoIP phone system is the better option for a business looking for an efficient, flexible, and cost-effective solution. With a hosted system, businesses can enjoy greater scalability. They can easily scale up or down as their call volumes change without having to worry about purchasing new hardware or software licenses. Moreover, the maintenance and upgrades are also handled by the provider, allowing businesses to focus on their core operations.

Additionally, the advanced features offered by hosted phone systems enable businesses to streamline communications and improve customer service. This ultimately increases productivity and revenue. Most importantly, the flexibility of a hosted phone system also makes it the perfect choice for businesses that value remote work and flexible schedules. Further, with an internet connection, employees have the ability to access the system from anywhere, granting them remote access. Overall, a hosted phone system provides businesses with a reliable, efficient, and cost-effective solution to meet their communication needs.

Wavetel Business: The top hosted phone system provider for your business

When considering a hosted phone system provider, Wavetel Business emerges as the leading choice in the market. Wavetel offers a reliable and affordable hosted PBX solution for businesses of all sizes, with unbeatable pricing plans, exceptional customer support service, and compatibility options.


Wavetel Business offers a wide range of compatible hardware and software options, allowing businesses to choose the setup that best suits their needs.

Competitive Pricing

The provider presents businesses of all sizes with flexible pricing plans that are both cost-effective and transparent, devoid of hidden fees or long-term commitments.

Customer support service

Wavetel Business provides exceptional customer support with 24/7 availability through phone, email, and live chat.

Final thoughts

In conclusion, the hosted phone system emerges as the clear winner over on-premise systems for businesses seeking cost-effectiveness, scalability, flexibility, low maintenance, and advanced features. Given the growing demand for remote work and the surging popularity of cloud-based technology, it becomes evident that the hosted phone system represents the future of business communication. Wavetel Business, as a leading provider, offers competitive pricing, excellent customer support, and compatibility with various devices and platforms. As technology continues to advance, on-premise phone systems may become obsolete, making the shift towards hosted phone systems even more crucial for businesses. So why wait for tomorrow?


Explore our Reliable and Affordable Hosted Phone System Solution

Don't miss out the Advantages of a Cloud-Based Communication System, Get Wavetel Business Today